H&R Block admits $32M mistake on their taxes

[K A I N]

With $32 million error, is it H&R Blockheads?

By David Twiddy
ASSOCIATED PRESS

February 25, 2006

KANSAS CITY, Mo. – Call it a gift to late-night comedians.

But the news that H&R Block made a $32 million mistake in its state income tax return could turn into a serious matter for the nation's largest tax preparer.

“For a firm like H&R Block, credibility is of paramount importance,” said James McAlexander, an Oregon State University marketing professor who has looked at how professional services providers appeal to consumers.

“If the H&R Block story becomes fodder for late-night television, where they become the butt of the joke, that could affect their credibility with prospective clients.”

Shares of Kansas City-based H&R Block fell $2.18, or almost 9 percent, yesterday to close at $23.01 on the New York Stock Exchange.

On Thursday, the company said it was restating earnings for 2005 and 2004 and the first two quarters of this year after discovering it had made a mistake in determining its state income tax rates.

The company, based in Kansas City, Mo., also reported a 68 percent drop in third-quarter profits, and executives told analysts that they were lowering their earnings expectations for the year.

Analysts didn't seem too concerned that the tax gaffe could persuade potential H&R Block tax customers to take their business to independent accountants or to competitors.

“Given what goes on with stocks, it's understandable for companies to have to go back sometimes and restate earnings,” said Mike Millman, analyst with Soleil Securities/Millman Research. “What's important is operations.”

On that front, Millman said he's far more concerned about H&R Block's report that, through the first month and a half of the U.S. tax season, the company has seen 4.1 percent fewer clients than a year ago.

The company has attributed some of the loss to a series of technical glitches at the beginning of the year that drove an estimated 250,000 potential customers elsewhere.

“There are some questions about the future of the paid preparer part of their business,” said Millman, who doesn't own H&R Block shares. “Whether (the decline in clients) was a bump in the road or a trend is unclear.”

In truth, the average taxpayer's return is not nearly as complicated as determining the tax burden of a company that took in $4.4 billion in revenue last year by operating more than 11,000 tax offices, providing mortgage lending, giving investment advice and selling business accounting services.

“We have advised our field offices that there's no relation between what goes on in preparing the individual tax returns and the corporate returns,” said H&R Block spokesman Nick Iammartino. He said the company doesn't expect the restatement to affect its number of customers.

In addition, customers who don't follow financial news may never know about the restatement. That could change if the ironic nature of a tax preparer getting its taxes wrong puts the news before a wider audience.

Jeff Swystun, global director of Interbrand Corp., a New York-based branding and design consultant, said he was disturbed by the back-to-back bad news H&R Block has suffered recently – California Attorney General Bill Lockyer sued the company last week over its use of refund anticipation loans.

But Swystun thinks the company will weather the storm.

“Consumers will eventually make a separation between their corporate situation and their history of providing quality and decent service,” he said. “It's a story of short interest, but I don't think it's going to cut into their market share.”

http://www.signonsandiego.com/uniontrib/20060225/news_1b25hrblock.html



NEW YORK (CNNMoney.com)

H.R. BLOCK: Somewhere beyond ironic, out near absurd and pathetic is where this story lies. H.R. Block, the company that sells tax advice to millions of Americans says that it goofed on its own tax return. It said underestimated its state tax rate and that it owes $32 million in back taxes. If ever there was a company that shouldn't make this kind of mistake! (The company also said that business was off this year due to a slow start to the tax filing season. HUH? What does that mean?.... The CEO later admitted the company was suffering from self-inflicted wounds. Time to lick 'em!) Stock (Research) has been all over the place and should be down on this news -- the company says it will have to restate earnings going back to 2004. And yet... and yet ... that's when you buy a stock. When it's down. I say wait a day or two, then pounce. The company still has a great brand. And let me ask you this: Do you think more or less Americans will need tax advice in the years to come? Precisely!

http://money.cnn.com/2006/02/24/commentary/streetlife/streetlife/

[K A I N]

http://money.cnn.com/quote/quote.html?pg=qu&sid=863&symb=HRB&time=5yr&uf=0 

https://us.etrade.com/e/t/invest/quotesandresearch


time to buy....

[J Bananas]

Turbotax bitches.

[ecrazy]

http://money.cnn.com/quote/quote.html?pg=qu&sid=863&symb=HRB&time=5yr&uf=0 

https://us.etrade.com/e/t/invest/quotesandresearch


time to buy....

fool, it fell two points.....its going to prob. bounce back +5 around the end of march, only way id buy H&R block stock is if it starts its normal decline in the summer, and then just drops like a mutha fucker, im going to be watching this stock now

[K A I N]

http://money.cnn.com/quote/quote.html?pg=qu&sid=863&symb=HRB&time=5yr&uf=0 

https://us.etrade.com/e/t/invest/quotesandresearch


time to buy....

fool, it fell two points.....its going to prob. bounce back +5 around the end of march, only way id buy H&R block stock is if it starts its normal decline in the summer, and then just drops like a mutha fucker, im going to be watching this stock now

Shares of Kansas City-based H&R Block fell $2.18, or almost 9 percent, yesterday to close at $23.01 on the New York Stock Exchange.